rose to 1.1911 on Tuesday. Pressure on the dollar increased amid concerns that external demand for dollar-denominated assets could decline significantly.
The reason behind this change was reports suggesting that Chinese regulators had advised financial institutions to reduce their holdings of US government bonds. This measure could help diversify risks and mitigate the impact of uncertain US economic policies.
Investors are awaiting delayed reports on the US labor market and inflation this week. These figures could adjust expectations about the future direction of Federal Reserve policy.
White House economic adviser Kevin Hassett said the pace of U.S. job growth could slow in the coming months due to weaker job and productivity growth.
The Federal Reserve is expected to leave interest rates unchanged in March, and markets are still pricing in two rate cuts for the rest of the year.
Technical analysis
On the EUR/USD H4 chart, after a momentum rally in late January, the pair entered a correction and consolidation phase. The price has recovered above the 1.1760 support level and is now testing the 1.1920-1.1950 zone. Bollinger Bands are narrowing, indicating stabilization and preparation for the next move. The medium-term structure remains moderately bullish as long as prices remain above 1.1760.
In the shorter time frame of the first half, bullish momentum remains limited to the short term. The price is moving along the upper Bollinger band after a strong bullish acceleration. It is now consolidating just below the resistance at 1.1920-1.1950. The oscillators are in the overbought zone, increasing the risk of a pause or shallow pullback, although the overall structure remains intact.
Conclusion
EUR/USD is set to gain, buoyed by concerns over dollar demand and a cautious outlook for US economic growth. While short-term fluctuations are expected, the medium-term trend remains bullish as long as key support levels hold. Investors will closely monitor upcoming inflation and employment data, which could influence future Federal Reserve policy decisions.
By RoboForex Analysis Department
Disclaimer:
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
